Houses have always been a major investment. And they have never been cheap to the FHBers !! I was one of those once and I chose to put the noose around my neck and pay off a mortgage. BUT I chose not to get the BIG house with all the trimmings. I bought what I could afford at the time. Ya got to start somewhere. I think the reason most people live in such an urban environment has something to do with the LACK OF WATER ...
I was born and bred in Ballarat. Most of my family and friends still live there.I was just looking at the prices in Ballarat today and i was quite surprised at them. I mean we're talking a piddley little rural city here...not a coastal town. A decent house in a good area in 350,000 and up.
When i left, these places were 250 and up...Thats not bad in 8 years.
For us we'll need to think a little defensive, not put too much borrowed money into our place. Leave that for the IP...
ANZ will keep its home mortgage rates on hold following the Reserve Bank of Australia's (RBA) Melbourne Cup day decision to leave the cash rate unchanged.
The bank's standard variable rate remains at 5.88 per cent per annum, after the RBA's overnight rate was left at a record low of 2.5 per cent.
ANZ's small business lending rates are also unchanged.
Australia's banks have previously raised their lending rates when the cash rate has been left unchanged.
THE Reserve Bank of Australia has made it clear that more interest rate cuts are possible, as the Australian dollar stays stubbornly high and amid concern that mining investment might fall at a faster rate.
The RBA has left the cash rate unchanged at a record of 2.5 per cent since cutting it from 2.75 per cent at its August meeting.
"It was appropriate to hold the cash rate steady but not close off the possibility of reducing it further should that be needed to support economic activity," the RBA said in its quarterly statement on monetary policy, released on Friday.
http://www.smh.com.au/business/worl...bubbly-global-home-prices-20131015-2vjh1.html
One of three American economists who won the 2013 economics Nobel prize today for research into market prices and asset bubbles expressed alarm at the rapid rise in global housing prices.
Robert Shiller, who shared the 8 million Swedish crown ($1.31 million) prize with fellow laureates Eugene Fama and Lars Peter Hansen, said the US Federal Reserve's economic stimulus and growing market speculation were creating a "bubbly" property boom.
China, Brazil, India, Australia, Norway and Belgium, among other countries, were witnessing similar price rises. "There are so many countries that are looking bubbly," he said.
http://www.macrobusiness.com.au/category/australian-property/
Reduce it further to get that AUD to drop below 90 cents and BINGO ! Velocity of money improves through the system and the cash starts flowing again. But but but what does that mean? Aaaahhh ... inflation opens up it's evil eye !
Unemployment is the key factor for the second coming of the RE bubble ... Bwahahahahhahaaaaaa
http://www.news.com.au/business/bre...te-cut-door-open/story-e6frfkur-1226755757857
Job creation in Australia's economy remains sluggish, with a big fall in full-time jobs during October being only partially offset an increase in part-time positions.
Meanwhile, youth unemployment and the number of people looking for more work remains high.
Figures from the Australian Bureau of Statistics show the jobless rate edged up slightly during the month.
It is now at 5.7 per cent.
The ABS has revised September's jobless figure from 5.6 per cent to 5.7 per cent, meaning the jobless rate has held effectively held steady for the past two months.
The figures reveal 27,900 full-time jobs were lost during October, while the number of part-time positions increased by 28,900.
Yes a nice currency war would be good for no one but that's where we are so dropping rates further only hurts the savers and reduces discretionary spending as shown in the stats. Typical university bred economist ideology?
Inflation? Exhibit A = housing = about the only thing benefiting from low rates? Low rates quickly negated by rising prices, net effect = society worse off! Good one Mr Stevens? Are you looking for a job at the US Fed?
Unemployment? Turning American = quality jobs going, being replaced by low quality part time.
It seems we are the only ones playing fair in global trade while our jobs go overseas and we let our farmers go out of business because of subsidised imports - let's start playing at their level and start imposing tarifs again!
You are quite correct Trainspotter.
Interest rates are raised to pull up inflation.
Errrrrr.... NO! For gawd sake man...
Yes a nice currency war would be good for no one but that's where we are so dropping rates further only hurts the savers and reduces discretionary spending as shown in the stats. Typical university bred economist ideology/theory by our central banksters?
Inflation? Exhibit A = housing = about the only thing benefiting from low rates? Low rates quickly negated by rising prices, net effect = society worse off! Good one Mr Stevens? Are you looking for a job at the US Fed?
Unemployment? Turning American = quality jobs going, being replaced by low quality part time.
It seems we are the only ones playing fair in global trade while our jobs go overseas and we let our farmers go out of business because of subsidised imports - let's start playing at their level and start imposing tarifs again!
Australia, on the other hand, has been the victim of constant daylight robbery over the years. It does not matter who is in power as there is too much money involved to change this. Australia's natural resources should have made it one of the richest countries in the world if the mining/resource sector was properly run by the gov't. Instead we spread our legs and basically gave it all away, in return for nothing else but... jobs to carry out the plunder. Let's go to Brazil and tell the locals, "Hey guys, can we have all of your wood? We'll pay you to cut down the trees and load them onto our ships, so we will be creating new jobs for you guys in return for raping your country of its resources. How does that sound?"
To a significant extent the boom in mineral exports is simply killing other industries rather than being growth as such.I agree, bloody good argument for the mining tax.
The latest trend is Australians using their superannuation as collateral to buy residential property, as well as other forms of property. Residential real estate now accounts for 14% of so-called self managed super funds. That’s helped drive an 8% year-on-year increase in house prices in September.
Now I’m not sure if the practice of using superannuation or pensions as collateral to purchase property is used in any other country but the dangers are pretty obvious. Particularly when many developed countries, including Spain, are raiding pension funds to finance their QE programs.
Australia has added risks given the extent of its housing bubble. Demographia says the Australian housing market is the most expensive in the developed world, with property prices at 5.6x annual income, with 3x or below considered affordable. Meanwhile, The Economist magazine suggests Australia is the world’s fourth most expensive housing market, with prices 44% overvalued versus rents and 24% versus wages (which are undoubtedly grossly inflated).
The risks to Australia from the inflated housing market are systemic also. Housing assets of A$4.9 trillion are 3.3x larger than Australia’s GDP. Moreover, residential property represents more than 60% of the big four Australian banks total loan books. Given these banks have an average leverage of 20x (equity/assets), it would take less than a 10% fall in residential property prices for equity in these banks to be wiped out.
Another angle.....of the bubble
View attachment 55202
View attachment 55203
Source http://asiaconf.com/
Another angle.....of the bubble
Interesting to note that our banks are some of the most profitable in he world? What does that tell you? I also note the US and UK with low ratios were the ones that suffered the most when their house prices fell through the floor !!! What does that tell you?
Interesting to note that our banks are some of the most profitable in he world? What does that tell you? I also note the US and UK with low ratios were the ones that suffered the most when their house prices fell through the floor !!! What does that tell you?
New analysis from PricewaterhouseCoopers shows Australia’s big four banks posted collective underlying cash earnings in excess of $27 billion, despite a rise in annual costs and only moderate revenue growth.
Accounting firm Ernst & Young also released a comprehensive report on in which suggested the sector may be at a “tipping point” for growth and commended the banks’ ability to deliver returns in a difficult environment.
Risk and Return are always tied together. The Australian banks have the higher returns, and that may be due to them taking on the highest risk (via an undiversified lending portfolio).
Depending on the year of the data, the UK and US would have probably had ratios closer to Australia before they crashed, which shows what would happen to the Australian banks if property prices were to drop here.
Depends what you mean by 'profit'? As is the case globally, the perception is that all has recovered so they can reduce the loan loss reserve requirements and book it as a profit? The underlying revenue growth figures are average at best?
Accounting firm Ernst & Young also released a comprehensive report on in which suggested the sector may be at a “tipping point” for growth and commended the banks’ ability to deliver returns in a difficult environment.
Seriously? If Obama gets stronger it means his policies are working which means QE will ease as unemployment is dropping !
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